Why Prepare A Business Plan

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You are considering starting a business ? Check out why nowadays it is important to have a proper business plan.

When my great-grand father started his serial entrepreneurship bout in the Caribbean, I’m pretty sure he didn’t have a business plan. He had bravado, wiles, and one base product that the British colonies needed – cocoa production knowledge. And even today, that’s the base of what you need as an entrepreneur! However, times have changed since the 19th century. We definitely have a more sophisticated structure of operations, competition, and investment nowadays.  So we need to have something more than a treasure map and a prayer to have our startup really start up!

The top reasons why you should prepare a formal business plan.

  1. To provide a road map for internal senior management and external stakeholders (investors, legal), to clearly explain the viable business opportunity and to map the future direction of the business.
  2. To hold the founders accountable for performance goals, and to demonstrate that the company comprises an experienced balanced management team capable of executing the business strategies laid out in the plan.
  3. To minimize possible future business failure by identifying and defining risks that will affect the execution of the business strategy, the growth of the company and offering possible solutions to mitigate these risks.
  4. To provide internal financial controls; to identify resources required to achieve objectives. To delineate a schedule, time frame, and detailed metrics for meeting key milestones.
  5. To provide a channel for communication between the executive team and external investors and stakeholders. In this light, to minimize the probability of litigation with investors by providing full disclosure of potential risks.
  6. To provide an analysis of the company’s sustainable competitive advantages, to demonstrate a detailed, quantified revenue model, and to fully identify the company’s intellectual property.
  7. To educate and motivate key employees independent of founders, and to provide a blueprint for further management and employee recruitment.

In general, a business plan demonstrates that the founders and executive team have the intellect and knowledge to clearly articulate a comprehensive business plan that details a startup’s economic viability and business model.  From an investor viewpoint, an executive team that shows rational, detailed, innovative thinking within the business plan may well have the proper skills to run a complex business!

To your success, Startups!



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